Overview
- The Productivity Commission released its interim report on housing supply regulation today, with submissions due on 30 September and final recommendations due in March 2027.
- It proposes major zoning reforms, including three-storey development across most residential land, more apartments in high-demand areas and fewer land-use and built-form controls.
- It also calls for stronger upfront strategic planning and better coordination of infrastructure, housing growth and hazard assessment.
- It proposes expanded fast-track and state-significant pathways, greater use of AI and better reporting of approval outcomes.
- PIA’s evidence is cited extensively throughout. PIA welcomes the focus on strategic planning and will assess the broader proposals against their ability to deliver more homes, better places and transparent decision-making.
The Productivity Commission has today released its interim report into housing supply regulation, setting out proposed reforms to land-use controls, development approvals and housing-enabling infrastructure.
The report argues that Australia needs to build more homes in the places people want to live and notes NHSAC projections that Australia will fall at least 220,000 homes short of the National Housing Accord target by June 2029.
The PC’s key conclusion is that land-use reform and infrastructure coordination are likely to have the greatest impact on housing supply. While faster and simpler approvals can help, the Commission explicitly acknowledges that approval reform alone will not be sufficient.
For example, the Commission notes that “Outdated strategic planning can result in unresolved conflicts being addressed during individual development applications, leading to longer assessment processes, greater community conflict and less consistent decision making.”
PIA has been actively engaged in the inquiry through a formal submission and direct discussions with the Productivity Commission. PIA’s evidence is cited at multiple points throughout the report.
Several of the Commission’s reform directions align closely with positions advanced by PIA, particularly its call to address infrastructure requirements and development trade-offs upfront through strategic planning. Others will require careful examination as the Commission develops its final recommendations (due in March 2027),
The Commission’s proposed approach
The report proposes four principles for a best-practice housing regulatory system:
- adopt a “build” mindset
- regulate only where necessary
- coordinate housing with infrastructure
- keep assessment processes simple, timely and predictable.
These principles are intended to support enough housing in the places where it delivers the greatest overall benefit, while balancing economic, social, cultural, environmental and safety considerations.
As an interim report, it presents reform directions rather than final recommendations. Further analysis and consultation will inform the final report, due to the Australian Government by the end of March 2027.
Land-use and zoning reform
The Commission considers reforming land-use controls to increase housing density in cities likely to have the greatest effect on supply.
Its proposed directions include:
- allowing development of up to three storeys across most residential land, subject to limited exceptions
- allowing mid-rise or high-rise apartments in high-demand areas with existing or readily expandable transport infrastructure
- reducing or removing minimum lot sizes where they constrain feasible development
- allowing housing in commercial zones unless there is a clear reason to exclude it
- reviewing controls that reduce commercial feasibility, including parking requirements, broad heritage protections and neighbourhood character restrictions
- removing or relaxing built-form controls that unnecessarily limit housing types, density and choice. This may include minimum dwelling sizes, minimum balcony sizes and storage requirements for apartments.
The report also recognises that zoning or releasing land does not guarantee that homes will be built. Land must be serviced, supported by infrastructure and commercially feasible before its theoretical housing capacity can become completed homes.
PIA has long supported greater housing diversity and density in well-located areas. However, decisions about additional density should be made through robust strategic planning rather than treating every neighbourhood as having the same capacity for growth.
Different locations have different levels of infrastructure, transport access, environmental constraints, hazard exposure and development feasibility. Strategic planning provides the evidence needed to determine where growth should occur and how it can be supported.
A stronger role for strategic planning
A particularly important reform direction is the Commission’s call for infrastructure requirements and development trade-offs to be addressed early through strategic planning, rather than being left to individual development applications.
The report proposes that governments:
- identify suburbs and localities where high housing demand is expected
- make facilitating housing in those areas an explicit performance goal for councils, agencies and infrastructure providers
- undertake area-wide technical studies covering matters such as flooding, bushfire and biodiversity
- identify infrastructure requirements and constraints early
- incorporate the results into planning schemes through clear, codified development requirements.
This generally aligns with PIA’s position that well-resourced strategic planning must come first. Up-to-date strategic plans enable growth in the right places, coordinate infrastructure, manage risks and give communities greater confidence in how their areas will change.
Governments at all three levels have underinvested in the plans, infrastructure and planning capability needed to turn reform into completed homes. Reversing that underinvestment will be essential if planning reform is going to translate into more housing.
Faster and more predictable approvals
The Commission proposes expanding fast-track pathways for straightforward, low-complexity development through deemed-to-comply assessment against clear, codified requirements, with minimal third-party input.
Other directions include:
- use of state-significant pathways to approve developments with a clear need for state-led assessment
- greater use of pattern-book designs
- better coordination of referrals between agencies
- greater use of technology, including using AI to help decision makers and applicants understand regulatory requirements and identify potential problems with applications
- more meaningful public reporting of the planning approvals process.
PIA supports removing unnecessary delay and making assessment proportionate to risk. However, the objective must be better housing outcomes, not speed alone. Fast-track processes should retain transparent decision-making and appropriate safeguards.
Resolving key issues through strategic planning should also make individual applications faster and more predictable by reducing the need to revisit area-wide infrastructure, hazard and environmental questions site by site.
Coordinating infrastructure with housing
The Commission identifies infrastructure as a major constraint on housing delivery, particularly in greenfield areas.
Its reform directions call for governments to:
- align infrastructure plans with housing objectives
- keep infrastructure plans current
- clearly report funding, costs and expected delivery for infrastructure
- coordinate infrastructure planning across governments and service providers
- sequence rezoning and infrastructure delivery more effectively
- ensure infrastructure upgrades coincide with increased housing capacity
- clarify responsibilities for delivering infrastructure, to ensure infrastructure agencies and regulators work together to deliver timely infrastructure to support housing
- make developer contributions more predictable, transparent and closely connected to the infrastructure required by development.
The report also identifies a potential role for the Australian Government in financing infrastructure, managing funding shortfalls and underwriting sequencing risks.
This recognition is significant. As PIA has continued to advocate, housing capacity created through zoning will only translate into homes if transport, water, sewerage, energy and social infrastructure can be delivered when and where they are needed.
Better data and reporting
The Commission calls for stronger reporting that captures the end-to-end planning process, including public reporting of outcomes by council.
PIA has consistently advocated for better planning and housing data. Current information remains patchy, inconsistent between jurisdictions and, in some areas, absent.
A nationally consistent approach should track housing from strategic planning and application through approval, infrastructure delivery, commencement and completion. This would help governments identify where delays are occurring and target reform at the barriers actually preventing housing delivery.
Issues beyond planning approval
The report acknowledges that interest rates and construction costs have reduced the financial feasibility of many projects. However, several major influences on housing delivery sit outside the inquiry’s scope, including taxation, interest rates, finance, construction labour, supply chains, building-material costs and the National Construction Code.
This is an important limitation. Large numbers of homes with planning approval remain unbuilt because of feasibility, financing, infrastructure and construction constraints.
Planning reform has an important role, but Australia’s housing shortage cannot be addressed without action across the entire housing delivery system.
Why this matters and what happens next
The report could significantly influence the next phase of planning reform across Australia, with the $2 billion Local Infrastructure Fund negotiations underway currently.
Its final recommendations will assess individual jurisdictions and may shape future government priorities for zoning, strategic planning, infrastructure coordination and development assessment.
Many of the proposed reforms go to the heart of planning practice. They could influence where and how density is permitted, the role of local planning controls, the use of fast-track and state-significant pathways, the level of third-party input, and how infrastructure and hazard considerations are addressed.
The report strengthens the case for greater investment in strategic planning, but it also proposes broad reforms that may reduce local discretion and treat different communities in similar ways. How these reforms are designed and implemented will determine whether they produce more completed homes and better places, or simply more theoretical capacity.
The Productivity Commission is seeking further evidence and feedback by 30 September before developing its final recommendations, due by the end of March 2027.
PIA will continue its engagement with the Commission, building on our submission and earlier discussions. We will advocate for strategic planning, coordinated infrastructure, greater planning capability, better data and action across the full housing delivery system, while carefully examining reforms that may reduce local discretion, community input or place-based decision-making.